The first hours of a commercial dispute are often more important than the first hearing.
A termination notice arrives. A supplier threatens to stop delivery. A customer refuses payment. A former executive downloads confidential information. A joint-venture partner announces that it is walking away. An urgent demand is received from lawyers.
The instinct is usually to respond immediately. That instinct can be expensive.
In the first 72 hours, a business should focus on preserving its legal position, protecting evidence and stabilising the commercial situation before making irreversible moves.
Hour 1–6: control the internal response
The first task is to identify who is responsible for the response.
Too many disputes are weakened because several people communicate independently: the CEO sends one message, finance sends another, operations makes a concession, and a salesperson sends WhatsApp messages that later become evidence.
Create a small response team. Depending on the matter, this may include:
- senior management;
- legal counsel;
- finance;
- IT or information security;
- the relevant operational lead; and
- communications or public relations where reputational risk exists.
One person should coordinate external communications. Internal speculation should be kept to a minimum.
Hour 1–12: preserve documents and digital evidence
Commercial disputes are increasingly decided by records created long before litigation begins: emails, messaging apps, invoices, access logs, board papers, contract versions, payment records and system data.
Once a dispute is reasonably anticipated, the business should take practical steps to prevent relevant material from being deleted or overwritten.
That may include preserving:
- email accounts;
- WhatsApp or other business messaging records;
- cloud folders;
- CCTV where relevant;
- ERP or accounting-system records;
- document version histories;
- access and security logs;
- original signed agreements; and
- board and management minutes.
Do not “clean up” documents. Do not rewrite historic records. Do not create retrospective minutes to make an old decision appear better documented than it was.
Hour 6–18: read the contract from the end backwards
Businesses usually remember the commercial terms of a contract but forget the machinery that controls a dispute.
Review:
- termination rights;
- notice requirements;
- cure periods;
- payment and set-off clauses;
- limitation or exclusion of liability;
- indemnities;
- confidentiality;
- intellectual-property provisions;
- force majeure or change-in-law clauses;
- governing law;
- jurisdiction;
- mediation or escalation requirements; and
- arbitration provisions.
A strong substantive claim can be damaged by serving a defective notice or ignoring a mandatory contractual step.
Hour 12–24: identify the immediate commercial risk
Not every dispute needs urgent court or arbitral intervention. Some do.
Ask what could happen before the dispute is finally resolved:
- Could money be transferred?
- Could assets disappear?
- Could confidential information be disclosed?
- Could intellectual property be used or registered elsewhere?
- Could a critical system be switched off?
- Could a performance bond or guarantee be called?
- Could a construction site or supply chain be disrupted?
- Could a competitor obtain strategic information?
This risk assessment determines whether the business should seek interim protection, negotiate a standstill, secure assets, change access permissions or take another urgent step.
Hour 12–30: understand the dispute-resolution clause
If the contract contains an arbitration agreement, the business should understand the seat, rules, tribunal appointment mechanism and any mandatory pre-arbitration steps before filing proceedings.
Kenya’s Arbitration Act provides the statutory framework for arbitration and for the interaction between arbitration agreements and the courts.
The correct forum matters. Starting in the wrong forum can waste time, cost and leverage.
Hour 18–36: quantify the claim before arguing about it
“They breached the contract” is not a damages analysis.
Finance and legal teams should work together to identify the economic consequences of the dispute. Depending on the contract, this may include:
- unpaid invoices;
- replacement costs;
- delay costs;
- lost margin;
- cost of rectification;
- professional fees;
- financing consequences;
- inventory losses; and
- other recoverable contractual losses.
At the same time, identify weaknesses in the claim. Were there prior delays? Was performance accepted? Were notices waived? Is there evidence of contributory conduct? Has the company itself complied with the contract?
Knowing the weaknesses early improves negotiation and prevents management from making decisions based on an unrealistically optimistic view of the case.
Hour 24–48: control communications
Emails written in anger frequently become exhibits.
Commercial communications should remain accurate, measured and consistent with the legal strategy. Avoid admissions that have not been considered carefully. Avoid threats the company is not prepared to carry out. Avoid accusing individuals of fraud, dishonesty or criminal conduct without a proper evidential basis.
Where settlement discussions are taking place, the legal team should advise on how they should be framed and documented.
Hour 24–60: protect people, systems and confidential information
If the dispute involves a former employee, director, consultant, technology provider or joint-venture partner, access control may be urgent.
Review:
- email and cloud permissions;
- administrator credentials;
- physical access;
- customer databases;
- source code and repositories;
- shared drives;
- banking authority;
- social-media and domain accounts; and
- confidential commercial information.
Security measures should be proportionate and legally defensible. The objective is preservation and continuity, not retaliation.
Hour 36–72: choose a strategy, not merely a reaction
By this stage, management should have enough information to choose among several paths:
- commercial negotiation;
- formal demand;
- mediation;
- contractual escalation;
- arbitration;
- court proceedings;
- urgent interim relief; or
- a combination of these steps.
The best strategy depends on more than legal merit. Consider cash flow, duration, confidentiality, enforceability, business relationships, regulatory exposure, reputation and management time.
Winning the first argument is less important than controlling the first 72 hours.
The executive checklist
When a serious commercial dispute arrives, management should be able to answer seven questions quickly:
- What does the contract actually require?
- What evidence must be preserved?
- What can happen before the dispute is resolved?
- Which forum has jurisdiction?
- What is the realistic financial exposure?
- Who is authorised to communicate externally?
- What outcome best protects the business?
How KDH Advocates can assist
KDH Advocates advises businesses in high-stakes commercial disputes, arbitration, construction matters, insolvency-related disputes and intellectual-property litigation. We assist clients from the first urgent response through negotiation, interim applications, arbitration and litigation.
This article provides general information only and does not constitute legal advice. Urgent matters should be assessed on their specific facts and contractual framework.